I have just been reading the book with the above title. It was written by Peter Whybrow M.D., the director of the world famous neuro-psychiatric institute at UCLA. Dr. Whybrow is an Englishman, who immigrated to this country and previously headed the department of psychiatry at both Dartmouth and the University of Pennsylvania medical schools. Dr. Whybrow is an expert on manic depression and the endocrinology of the central nervous system, and has written previous books about depression and other mood disorders.

I have enjoyed this book primarily because it lucidly and scientifically explains the American problem of acquiring more and more at the expense of happiness. Americans acquire possessions of all types along with more prestige, more power, more fame, and yet do not generally acquire lasting happiness.

Dr. Whybrow explains how the human brain is structured and why it is so easy for us to fall victim to mental disease and imbalanced physiology, which in turn feed the maniacal desire for more and more, but fails to bring happiness. To quote the books liner notes, “Taking into account our ancestral biology, he sheds critical light on the dangerous misfit emerging between our consumer driven culture and the brain systems that evolved to deal with privation 200,000 years ago. Absent any controls-cultural or economic constraints- we are easily hooked on our acquisitive pleasure seeking behaviors….”


The book is a thorough look into what the human physiology is organized to deal with. It brings up the question, what are human values and what are American values? In my opinion, it is important reading. Through reading it, I have begun to understand our drives for more and more. It becomes clear why the founders of every major religion, and most religious philosophers have warned against excess in any area of life.

American Mania; When More is Not Enough may also give insight into why, as a nation, we are maniacally driven to give so much to our own populace and to attempt to manage so much of the rest of the world’s activity. Many, myself included, believe that we are actually financially bankrupting ourselves, and sowing the seeds of our own demise. While, because we are in the grip of a national mania, it is not easy for us to see our own mistakes.


I ask with deep sincerity, are we not making the exact same mistakes that Rome, Great Britain and many other powers have made before us? Are we not extending our military reach, while simultaneously playing to the home crowd by giving away more social services than we can afford?

Perhaps, as a nation, we are engaged in an expensive bid to do too much, and control too much. The outcome of this experiment may be very much like those of past powerful nations that have overreached. Those nations did not enjoy happy endings.


The interest rates on long-term bonds are rising in the U.S. This is creating a steeper yield curve where long-term instruments have higher yields than short-term instruments. A steeper yield curve is a sign of expected inflation. Inflation is bad for the U.S. dollar and good for gold. We are continuing to buy foreign currencies and gold on dips, and expect much higher prices for both in the future.


Oil service companies in the U.S. generally sell at higher valuations than comparable companies in Canada. There are, in our opinion, a few reasons for this:

1. Canadian oil service companies are often smaller.
2. They have a narrow focus of customers geographically.
3. Canadian oil service companies often serve natural gas wells, and natural gas pricing is more seasonal and volatile than oil pricing. However, recent disparities in valuation make Canadian oil well service companies look undervalued versus their U.S. counterparts.

Due to more exploration and larger exploration budgets among Canadian gas producers, there is a need for more fracturing, pumping and disposal services, as more wells and tighter sands are drilled. These and other variables are leading to fast growth among Canadian service companies. Because they are growing from a smaller base, a rapid growth rate is more easily achieved. Eventually, investors will begin to notice companies whose growth is accelerating.


Recently, the Financial Times had a big article on world energy production (which is falling) and world energy consumption (which is rising rapidly.) Here is a quote from the article: “H.I.S. Energy, a leading consultancy advising oil majors, estimates that the world has been consuming oil faster than discovering it since 1986.” Our comment: It is no wonder that prices are rising today. The good fortune for the world is that the price increases have taken so long to develop.

The next point is that the growth of Russian energy production is supposed to decline by half in 2005. Energy investors are afraid of Russia and with good reason. The recent retreat of the Russians from their experiment with capitalism has made all types of investors, including energy investors, understandably nervous.

Russia will probably try to create new government owned businesses that consume energy, and/or make intermediate products that consume energy, thus using more of their energy for internal purposes. Given the track record of previous Russian and Soviet government business enterprises, you must excuse me if I express skepticism about their ability to manage any commercial enterprise in a profitable manner.

In any case, energy used in this way, with an eye to increasing Russian economic growth, will not be exported.


As an experienced investor in precious metals and currencies, and as a card-carrying cynic, I am not at all surprised to see that Japan is out making announcements today designed to cause a rally in the U.S. dollar.

As you may know, Japan’s fiscal year ends on March 31,2005. As you undoubtedly know, Japan is the largest foreign holder of U.S. government debt. As one can easily surmise, Japan has had a very big decline in the value of their holdings in dollar bonds over the last year. Now that their year-end is approaching and they must publish a balance sheet of the value of their holdings, the Japanese are reverting to a time honored manipulative behavior that is scandalously engaged in by many central banks.

They are trying to get the dollar to rise so their balance sheet will look better on
March 31. They are making, and will continue to make announcements about how much they love the dollar, how undervalued it is, how they will continue to buy and hold dollars, and etc. The purpose of these rather ham handed pronouncements is to scare speculators and make it obvious that the Japanese will spend a lot of money on intervention to prop up the dollar between now and March 31.

Simultaneously, speculators are being warned that it will be expensive to bet against the Japanese who have a printing press working over time. They just take the money and buy dollar bonds with it. Actually, it is more complicated, but that is the end result. Thus, they accomplish two goals simultaneously. First, the Japanese prop up the dollar. Second, they send the value of the yen down and thus benefit Japanese export industries. From their side the speculators have also got a short-term reason to move out of currencies for a week or two. The selling of dollars with low interest rates to buy foreign currencies with higher interest rates is getting less attractive as recent rises in U.S. interest rates makes it less profitable.

Recent U.S. economic data continues to be negative for the dollar. Key takeaways from the data as we interpret it are:

1. Commodity prices are at 20 to 25 year highs. Soft commodities, like grains, and hard commodities, like energy and metals, are both at highs. This implies that inflation may have an up tick in coming months. This is bad for the dollar and good for precious metals.

2. U.S. deficits continue to grow as a result of both military and social expenditures, and there is no program in effect to do anything about them. Again, this is good for precious metals and bad for the U.S. dollar.

3. The demand from developing countries for raw materials is very strong and shows no long-term sign of slowing. Thus, we may see continued high commodity prices, and they may be with us for a prolonged period (with temporary periods of respite). This is positive for the long-term price trends of precious metals and energy.

In summary, all of these trends argue strongly for a continuation of the downtrend in the value of the dollar after the Japanese have had their end of the fiscal year currency rigging fun.


I have recently read several very good books that I feel comfortable recommending

1. Blink: the Art of Thinking Without Thinking, by Malcolm Gladwell. Gladwell is a good thinker about the basic experiences that we have in daily life. It is easy reading about a serious subject: when to trust your intuition and when to pay no attention to it.

2. The Man Who Changed China, by Robert Lawrence Kuhn. This is an insider’s view of the life of Jiang Zemin, who presided over a marvelous transformation in the world’s most populous country. This book gives a good insight into Chinese thinking and how the Chinese system works.

3. Benjamin Franklin, by Walter Isaacson. A biography of the great American intellect and leader.


Seasonal factors argue for a retreat by many world stock markets in the coming months. Often, on a global basis, stocks peak in late winter and bottom in early fall. We also see a pattern that energy companies peak in spring and bottom in the July/August time frame. So we are waiting to make new commitments in global stocks and energy stocks for later in the year.

However, there are two areas for investment, which are opportune at this time. Non U.S. currencies are attractive for a renewed period of appreciation beginning at any time, and precious metals and precious metals stocks are also attractive at the present time in our opinion. I am buying companies with the potential to develop a stream of royalties like Tan Range Exploration (TNX) on the Toronto Stock Exchange, and gold bullion and gold bullion proxies like Street Tracks Gold Trust (GLD) on the NYSE.